North American companies included in the 2016 Deloitte Technology Fast 500TM achieved revenue growth ranging from 121 percent to 66,661 percent in the 2012 to 2015 time frame, with a median growth of 290 percent.1 How would your company handle the HR implications of explosive growth in the double, triple, or even quintuple digits?
For high-growth organizations, it is imperative to plan for the future while dealing with the growth challenges of the present so that the company’s trajectory doesn’t resemble a shooting star—a flash of brilliance that burns out too quickly.
For our purposes here, we define high-growth organizations as organizations with < 5,000 employees going through significant headcount growth (greater than 25 to 50 percent YOY). When a company experiences explosive revenue growth for a consistent period, there is often a rapid and massive increase of headcount occurring in parallel to support the growing business and continue to drive or maintain the revenue gains. This revenue and headcount growth might be caused by a number of reasons. The organization may be transitioning from private to public and using post-IPO funds to expand. It may be growing from an infusion of venture capital funds. Or it may be growing headcount exponentially via an M&A deal.
What is often lost in the midst of high-volume growth are the people-related implications of the rapid expansion, and strategically setting up the business for future success as revenue and headcount numbers continue to get larger and larger.
Businesses typically proactively plan how to scale their products and services quickly, considering supply chain, customer service, sales, and other operating functions. It follows that the people side of growth should also be planned for. Multiple areas within HR may need to be addressed. The following considerations are important whether rapid growth is occurring for an entire organization or for a specific geography or business unit.
At the highest level, consider HR strategy and services—Is HR capable, scalable, and sustainable during company growth?
Mature organizations have an overall business strategy, to which each business unit and enabling function aligns its own vision, mission, and strategy. At high-growth organizations, due to the speed at which the business is growing and changing, it is common for enabling functions like HR to be consumed with putting out fires (e.g., cleaning up compensation plans prior to an IPO) instead of considering long-term strategy.
High growth typically doesn’t come as a surprise to a company, so it shouldn’t come as a surprise to HR. Organizations should define HR’s strategy to support growth and determine where to prioritize investment in HR services that directly impact business objectives. The HR strategy should clearly define how HR can scale up and down to support the desired business growth, and HR should have a plan for what sort of strategy and services it will need to support the business before, during, and after rapid growth.
Are you part of a large/mature organization? These considerations are applicable when launching a new business unit, product line, or entering a new market. The existing infrastructure and scale will help, but crafting a short-term, BU or market-specific HR strategy will help maintain the focus on sustainable business growth.
Talent acquisition, retention, and development—Is HR ready to secure and maintain the workforce to support growth?
Organizations should determine what competencies and skills are needed for the future and align recruitment, rewards, and development programs accordingly. Onboarding practices should be prepared to accommodate high volumes of new employees, while retention strategies can help reduce turnover and “brain drain” during what could be a stressful period for current employees. Change management strategies should aim to help all employees—new and existing—deal with the effects of growth and the inevitable growing pains. They can also be used to help shift or maintain the company’s culture as desired.
Are you part of a large/mature organization? Think about how to tailor your onboarding and recruiting strategies to support the new BU or market that is driving growth—it may not be a “one size fits all” situation due to the unique nature of the BU or market.
Vendor and technology selection—What are the right vendors and technologies to support the business and scale with it as it grows?
Current systems that were manageable for a small population of employees may be inadequate or even pose a regulatory risk for large and growing populations. Organizations should evaluate technology for its ability to scale as the organization grows in size (e.g., growing from 200 to 1,000 or 1,000 to 5,000 employees) and diversity (e.g., expanding from a North American base to include a workforce in Asia) and decide whether to invest up-front in a scalable HRIS platform or plan for eventual transitions from a small-to mid-to large-tier provider.
Current vendor relationships should also be evaluated for their ability to scale with the organization, taking care to note whether increasing headcount would trigger changes to service level agreements or fees. Similarly, HR Shared Services organizations should understand where internal technology or services can easily be scaled to support growth and where gaps may exist, such as an inability to provide support for specific languages or new time zones.
Are you part of a large/mature organization? Proactively partner with your technology providers/vendors to come up with solutions to support the growth of your new BU or entry into a new market. Don’t assume it will be an easy change for your partners only to run into challenges down the line; collaborate and innovate together.
Lessons to be learned
Smaller, privately held organizations are typically focused on growing headcount organically through successive rounds of funding or after an IPO event. Larger companies are typically focused on growing headcount via M&A or in support of a new product launch or new market entry.
Both types of companies have lessons to learn from each other. Smaller companies can learn about various HR models that work and deliver services at scale. Larger organizations can learn from the ways smaller companies operate with agility and innovation, including testing new operating models, technologies, and vendors and using unconventional methods to engage and manage talent.
One of the most important lesson is to include HR in the discussion when planning for the organization’s growth. Anticipating the impacts on employees and on HR strategy, systems, and processes can help reduce the risk of costly inefficiencies and upheaval that temper the positive aspects of growth.